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📈 Welcome to our April 2016 newsletter

📈 Welcome to our April 2016 newsletter

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This month CEO and Managing Director, Peter Coker, responds to a number of queries that Martin Aircraft Company has received from shareholders and the wider community in the form of a Question & Answer session. We also provide feedback on our attendance at events, a certification update, and a more in-depth introduction to our majority shareholder, KuangChi Science and its Global Community of Innovation.

Martin Aircraft Company Enjoys Great Success at DefExpo India 2016

We are very pleased to report that the Martin Jetpack took centre stage at the ninth edition of DefExpo, the biennial exhibition of Land, Naval and Internal Homeland Security Systems in India, which got off to a spectacular start on the 28 March against the scenic backdrop of Naqueri Quitol in South Goa. It is the first time the event, organised by the Indian Ministry of Defence, has been held outside the capital city of New Delhi.

Martin Aircraft Company’s participation at DefExpo was in direct support of our regional Alliance Partner M2K Technologies, who hosted our Business Development Manager, Catherine Stuart, and one of our static display Jetpacks. The Jetpack quickly became the “must see star of the show”, with visits from key officials from India's Fire, Police, Ambulance, Civil Defence, Search & Rescue, Humanitarian Assistance & Disaster Relief (HADR) and Homeland Security Services.

The highlight of the show was a formal visit to our stand by the Indian Defence Minster, Manohar Parrikar, to learn more about the Martin Aircraft Company and the Martin Jetpack capabilities in both manned and unmanned operations and how this distributive technology is well placed as a solution for the many challenges that the complex operational environments in India present.

Attendance at this major regional event has generated a number of potential sales leads and these will be followed up by our Alliance Partners supported by our Sales and Marketing team.

Martin Aircraft Company Limited is delighted to announce the success of its first New Zealand unmanned public flight display with its innovative and versatile Martin Jetpack.

Over 10,000 aviation enthusiast, VIPs and Media gathered at Wanaka Airport in the South Island of New Zealand for day 1 of the 3-day airshow to witness the display of a Martin Jetpack in its home country.

The flights were conducted using the advanced P12 prototype. The P12 is the latest testing model for the Martin Aircraft Company, which is due to release its first commercial Jetpack in the latter half of 2016 for delivery to initial First Responder customers in the second half of this year.

Speaking of the demonstration flights, Martin Aircraft CEO and Managing Director, Peter Coker, says, “Since the beginning the company has had a core group of loyal Jetpack followers in New Zealand and increasingly internationally. Warbirds over Wanaka represented an opportunity for us to show our appreciation for this support and share with all aviation enthusiasts and their families that the Martin Jetpack dream has now become a reality.”

Test Pilot for the flights, Michael van der Vliet, comments, “It was such a privilege to be in Wanaka making aviation history and giving the public an opportunity to see the Jetpack operate in its unmanned rescue mode. This mode will be used in situations where traditional aircraft cannot operate, such as high rise tower rescues.”

Michael continues, “Flying the Jetpack remotely using its fly by wire system makes it extremely simple to operate and the safety systems will make the Martin Jetpack one of the safest light aircraft on the market today. Also, unlike most quadcopters, which are limited to a few kilograms, the Jetpack when operated remotely can lift up to 12okg, making it a very versatile UAV (unmanned air vehicle).”

Martin Aircraft Company is currently negotiating contracts with First Responder service providers such as Fire, Police and Ambulance services.

Mike Van Der Vliet and Andrew Jackson have become the first pilots at Martin Aircraft Company to complete their pilot training for Remotely Piloted Aircraft Systems (RPAS) under the new NZCAA rules. The rules, which became enforceable in February of this year, apply to the operation of RPAS, UAV, Unmanned Air Systems (UAS), drones and model aircraft and were introduced by the NZCAA last August.

Says Mike Read, VP of Flight Operations, “We are extremely excited to have our pilots now fully operational under the new NZCAA rules. Martin Aircraft Company has been working closely with the NZCAA and recently submitted an exposition showing that we have identified hazards and risks associated with our operation and ways in which we will mitigate these risks. Also submitted was the large suite of Flight Operations documentation developed over the last eight months for the purpose of defining us as an aviation company. The result is that the NZCAA has granted us an Unmanned Aircraft Operated Certificate (UAOC), which is our licence to conduct unmanned aircraft operations in New Zealand and to train people to do so.”

The certifications mark off another important milestone for Martin Aircraft Company as it moves towards production in the second half of this year.

Martin Jetpack Certification Update

We recently announced that Martin Aircraft Company had made the decision to move away from our original microlight certification pathway towards type certifying the Jetpack. This was due to a number of factors, including limited recognition of the microlight standard by both aviation authorities and customers, particularly in the US, and the fact that the NZCAA recommended full certification for volume manufacture in preference to Microlight.

Says Ben Taylor, VP Programme and Business Excellence at Martin Aircraft Company, “Type certification of the Jetpack opens up a number of new markets and a broader range of opportunities for the company. It also opens up potential pathways to operate under specialist circumstances, such as in low visibility or built up areas.”

Type certifying the Martin Jetpack consists of three main stages – Experimental, Restricted and Full Type Certification. The current focus is on achieving Experimental Certification.

“All our existing aircraft will be moving towards an Experimental Certification as soon as is practical,” Ben continues. “It allows for a much more robust certification programme, which means our beachhead customers, who will be able to operate the Jetpack under this category, can do so with complete confidence.”

Martin Aircraft Company is working closely with the NZCAA to develop a certification basis that can be recognised by the broader community of global aviation regulators to facilitate access into the global marketplace.

Investor Relations - Australia India TAT Capital Expo 2016

Following on from the success at DefExpo India 2016, Peter Coker, Chief Executive and Managing Director of Martin Aircraft Company Limited will be a key speaker at this year’s Australia India Tat Capital Expo 2016 (TatXpo), which will be held in Hyderabad, India, from 27-29 April 2016.

TatXpo will bring together CEOs, innovators, investors and thought leaders from Australia and India to forge new commercial partnerships and strengthen economic ties between two great countries. The sector-focused expo in India’s biggest tech incubator allows leading Australian growth and early-stage companies to meet their Indian counterparts alongside the corporate and investment community to connect, collaborate and co-invest.

Coker states, “Second only to China in terms of population and with the same challenges of ultra-high density urban populations, the Indian market has the right mix of economic empowerment and operational challenges that makes India an ideal market for deployment of the Martin Jetpack for use by First Responders and other similar groups. The Martin Jetpack can take off and land vertically (VTOL) and because of its small dimensions, it can operate in confined spaces such as close to or between buildings, near trees or in confined areas that other VTOL aircraft such as helicopters cannot access.”

TatXpo was created by Tat Capital as a platform for Indian companies and investors to connect with Australian and New Zealand companies and investors to collaborate and commercialise high growth, high impact ideas and facilitate trade and investment.

http://tat.capital/tatxpo/

Shareholder Update - A Q&A Session with CEO Peter Coker

We often receive questions either through our shareholder channel or other media relating to Martin Aircraft Company products, strategy, timelines and so on. This month, as part of our newsletter, we have posed a number of these questions to our CEO and Managing Director, Peter Coker, in order to provide greater visibility of our plans to the wider shareholder community and other interested parties.

Q: We often talk about the "mule train" concept. Have there been any conceptual studies carried out to flesh this out, are any studies planned or is it all just talk?

A: Our focus at present is to establish a single capability Jetpack that can be flown either manned or unmanned. This meets our first customer requirements. The “mule train” concept was socialised some years ago as some people felt that the Martin Jetpack would be limited by its inability to carry more than one person. Electronically tethered formation flying is not a new concept and the technology has been around for some time. As we develop the Martin Jetpack using the new flight control system we are investigating whether the mule train concept can be directly linked through our own flight control software or whether we need to use an additional piece of equipment that is already proven. The best option will then be incorporated into the Jetpack. However, the first releases of the manned and unmanned aircraft will not have the “mule train” capability fitted as it is part of our incremental capability growth path.

Q: With regard to the Heavy Lift UAV, what is needed in terms of technical and regulatory milestones to make this a reality? Would the load be suspended from the landing gear? How would the load be released? How would the UAV pick up, say, an injured person? How would control be maintained beyond line of sight? Is there autonomous capability planned?

A: We are one of the few companies that have been granted an Unmanned Aircraft Operator Certificate, by the NZCAA. This allows us to operate the unmanned aircraft commercially and allows us to issue pilot qualifications for Remote Piloting. However, we are keen to ensure that our commercial unmanned air vehicle is subject to the same rigorous design and build process under which our commercial manned Martin Jetpack will be designed and built. This will be advantageous to us in the long term as it will give confidence to the regulatory authorities around the world that our unmanned air vehicles are inherently safe and can be used in unrestricted support of first responders and other commercial applications within industries such as oil and gas, mining, engineering and agriculture.

Our planning at the moment is to have a fixed platform for load carrying that can be released on landing from beneath the aircraft. In terms of various loads (including people) we are in discussion with a number of companies that specialise in providing the load carrying environment for UAVs. Our commercial Heavy Lift UAV is planned to lift 120kg and we intend to adapt it to the customer requirements in terms of how the load is carried. A good example is the crop spraying capability of the UAV, which has the arm across the UAV rather than underneath it.

Our first UAV will be controlled line of sight but we will be incrementally introducing the autonomous capability in the near future. We will also be looking in the future at over the horizon controlled operations potentially using our association with the Global Community of Innovation (GCI) under the guidance of KuangChi Science.

Q:Why do we continue to take static models to air shows? Doesn't this represent missed opportunities to showcase the Martin Jetpack's capabilities and build its brand? An example is the Warbirds over Wanaka Airshow, its first public flight on home soil. If an American company can get permission to fly their unproven jetpack around the Statue of Liberty what stops the Martin Jetpack from being flown around the Sydney Harbour Bridge and Opera house?

A: At present the Martin Jetpack is not well known around the world so the idea of taking a static model to air shows is to ensure that the maximum number of people are able to see and experience up close what the Martin Jetpack capabilities might be. Having a stand with a static and often accompanied by a simulator is the most effective way to reach our potential customers. We also undertake disruptive marketing - as an example we displayed the static aircraft and simulator at the recent Fire and Security show in Dubai and we certainly attracted a lot of interest as it is unusual to have aircraft at this type of show.

We displayed the unmanned version at Wanaka, which allowed us to demonstrate the versatile capability of the Martin Jetpack as the UAV market is substantial. However, the Wanaka show is not a show where any commercial entities would have an interest so we did not expect a flurry of enquiries. The Martin Jetpack has been around since the mid eighties in terms of development so the New Zealand view is somewhat subdued compared to when we take it to new countries that have not experienced it before. Our P12 Jetpack was designed back in 2012 and did not have the same degree of robustness around its design that our new Jetpack will have. For this reason and on the basis of safety we have had to limit displays involving a manned Jetpack – as you may be aware the P12 family of Martin Jetpack are not fitted with the new ballistic parachute. To do so would have required a retrofit and testing programme that would have distracted from the work to meet key milestones on the incrementally developed commercial Jetpack. Incidentally, the parachute programme is progressing well and the company with which we are working is carrying out additional testing to show its effectiveness across the whole Martin Jetpack flight envelope.

We have shown manned capability to the public in early December both in Canterbury, New Zealand, and later in China where our videos show the amazingly impressive performance of the Jetpack. We are now concentrating on building our next Jetpack, P14, which will have much better reliability and capability. It will also be the first Jetpack where we will fit the new ballistic parachute. This is not the parachute you see in the high flight video of 2011 but a much more advanced version that can be seen separately under test on our web site. We are very excited about this capability as it will allow the pilot to eventually operate the aircraft safely across the flight envelope, including close to the ground. Along with our incremental growth strategy the parachute may be initially fitted without the automated opening via either our flight control system or engine management system. This will mean the parachute will be manually operated by the test pilot and we will fly the aircraft with operational mitigations (such as minimum height) in place.

I wouldn’t wish to comment about our friends who are developing the rocket belt. Our principle is to work alongside the New Zealand Civil Aviation Authority regarding any demonstration of the Martin Jetpack. The NZCAA coordinates with the country where we wish to fly a manned display. At many air shows the authorities require us to have a degree of maturity that is not available on our present Jetpack. That said, when it comes to potential customers, we do offer to undertake manned demonstrations with the customer present at our test facility in New Zealand where we can have a much better interaction and discussion.

I would like to add that in addition to marketing our focus is very much on meeting technical milestones. It is absolutely essential we start delivering the Martin Jetpack to commercial customers this current year and that means the rapid build-up of design and test engineers, which has been very much part of our present strategy. This has been interesting as the search has had to be global in order to obtain people with the necessary qualifications. Our team has grown markedly and we are on track to deliver to commercial customers later this year.

Q: How far have things moved towards building the Jetpack Display Team? It's been on the web site for over a year but no sign of it.

A: The Jetpack Display Team is a marketing tool and consists of a number of elements. Eventually we expect to have a team of Jetpack Pilots that will perform at events but this is something we intend to do when we have moved away from the P12 Jetpack. In addition, there is considerable resource tied up in display teams and at the moment these resources are better deployed undertaking testing of our aircraft as we progress towards first commercial sales of the Martin Jetpack in 2016. Currently our Display Team is more about providing a static, or a static and simulator, or a static, simulator and manned or unmanned flight. We tend to prioritise events that have the greatest return on investment for us either in terms of people, cost or potential customer base. For the majority of events we are “invited” to attend, which means the cost to the company is minimal. Our Display Team also undertakes flying for various non-public events, such as television recordings or adverts.

Q:What happened to all those supply agreements that were announced with a fanfare at the Paris Air Show?

A: These supply agreements are very much alive. As I like to point out at every presentation I make, the Martin Jetpack is not a commodity – it as an aircraft. Therefore, when we announce the signing of Letters of Intent or Memorandums of Understanding, this is the start of the discussions and negotiations that may lead to the eventual signing of binding contracts. Each potential customer is different and as I have also mentioned publicly, it is not unusual for discussions to take anything from 18 months to 3 years, depending on the customers’ budget cycles. Therefore, it was important for us to have such agreements signed by the middle of 2015 so we could move forward to the commercial discussions. I am not at liberty to talk about the discussions that are ongoing due to their commercial nature. I know this must be frustrating to shareholders and may seem as if we are not doing anything here but rest assured much work is going on behind the scenes with those that have already been announced, including the KCS Joint Venture working through the negotiations with all the China entities with which we have agreements. As we sign agreements moving forward we will make the announcements to shareholders and the wider community.

As part of our discussions we look at delivery date requirements of customers that meet the incremental growth capability of the manned and unmanned Jetpacks. This cements our long term production plan.

Q:When is it planned to send some craft to Avwatch? What has to happen to bring this about?

A: We are in constant discussions with Avwatch. As a company they are very excited about the capabilities of both the manned and unmanned Jetpacks. Their reach into the first responder environment in significant areas of the USA means that our relationship with them has tremendous potential. In fact, our new Business Development Manager is currently on her way home from the US (via DefExpo in India, which is also attracting a lot of media attention for us) having spent some time with Avwatch mapping out the plan. Our present planning is that Avwatch will be one of the early commercial recipients of the Martin Jetpack during 2016.

Q:How easily will the new, heavier, more powerful and thirstier engine integrate into the airframe and how much tinkering with the FCS and other systems will have to be done to stabilize the craft? Is it expected to improve the range and payload or diminish them?

A: The engine fitted to the P12 Jetpack is a V4 2 stroke engine. It has very limited reliability and was never planned to be a production engine. Prior to the raising of capital, it was very difficult to run parallel engine paths other than trying to eke out greater capability from the present design. Since then we have worked with a number of companies and our new engine (which we expect to announce in the next few months) is well into testing. It is actually lighter than our present engine and testing is already showing that the capability is meeting our specifications.

Our intention is to fit the engine to future manned and unmanned vehicles beyond P13, which is an unmanned test vehicle (UTV). As we don’t need the new engine until the build of P14 and beyond we are using the test facilities at the engine manufacturer to continue our testing rather than undertaking the advanced testing ourselves in New Zealand. This minimises time between any modification requirements that may be needed as testing progresses. Our Flight Control System is also new and will be tested on the UTV in the coming weeks. Our technical specification is the key to what we require and at this stage we are confident that the engine will allow us to meet this specification. However, along with our philosophy of incremental capability growth, we initially would expect to have less time between engine overhauls than our later expectations until we have obtained sufficient evidence of its reliability. This has been built into our growth programme. It is probably also worth mentioning that all our early potential customers are aware that we are on a path of incremental growth capability and are very happy to be part of that journey to a fully certified Martin Jetpack in the future.

Q:How does the new change in shareholding affect the strategic direction of the company?

A: Martin Aircraft Company has a philosophy of looking at “why” we are here. Glenn Martin had a dream of the Personal Jetpack and that is very much still alive. But conceptually it is wider than that in that we are here to make human lives better, be it “saving human lives” or “flying the dream”. This has driven our approach to target the first responder initially with the personal Jetpack to follow later. The “how” becomes the use of the Jetpack technology that has been developed over the years and the “what” is the Martin Jetpack. KuangChi Science are an amazing disruptive technology company who also have a global philosophy of improving human lives. The reason that they have invested in Martin Aircraft Company is because we are so aligned in our thinking around what our purpose is all about. I would say that the change in shareholding has strengthened our continued strategic direction.

Q:Will there be any new directors appointed to replace the two directors who resigned recently?

A: As a growing company we continually look to ensure we have the correct Board and governance structure in place for the global environment in which we intend to operate. Our recent alignment was for that reason and we will continue to review, and if necessary, structure the Board to meet the changing needs of the company.

Q: With the exit of No 8 Ventures how does the share structure now look?

A: Our major shareholder is KuangChi Science with 52%. Glen Martin holds 9.7 % of shares, which are escrowed following the IPO and ASX listing until February 2017. NZVIF were part of the No 8 Ventures fund, which has since been wound up by No 8 Ventures. The shares in the fund were distributed in-specie to the underlying investors in NZVIF. As at today’s date, NZVIF holds 4.6%.

I would like to make one more point on closing. Martin Aircraft Company is currently a non-revenue hi-tech company. In my many engagements with shareholders and potential investors I have noted that there is a tremendous difference in understanding about what this means. Our role is to deliver to our shareholders what we said we would do. This has been outlined in our prospectus last year and at my presentations. We remain committed and on track to deliver the first batch of Martin Jetpacks later this year and establish an order book for the future.

KuangChi Science and the Global Community of Innovation

Recently KuangChi Science Limited (KCS) subscribed to the convertible bond agreed at the time of Martin Aircraft Company’s IPO and provided the company with net proceeds of NZ$23.7m to continue on its path to commercialisation. Since then we have had the pleasure of hosting various Directors and employees of KCS at our Wigram offices in Christchurch, New Zealand. This has allowed KCS and Martin Aircraft Company senior management to share with the remainder of the company the achievements to date of this innovative Chinese company and we have been amazed and inspired by KCS’ vision for the future.

The Kuang-Chi Institute of Advanced Technology was founded in 2010 by Dr Liu Ruopeng along with a number of founding members who shared Dr Liu’s passion for “innovation that changes the world”. This passion has become the vision of the company itself and has been the driving force behind its Global Community of Innovation, which was unveiled at the end of last year.

The purpose of the Global Community of Innovation (GCI), according to Dr Liu, is not only to invent the future through innovation, but also to deliver this future globally. KuangChi believes that there are three trends leading to the future - Indepth Space, Spiritual Machines and Ultimate Connection. Dr Liu, who is also a director of Martin Aircraft Company, explains, “Indepth Space means to develop and utilize multidimensional air and space to the fullest extent possible. Spiritual Machines means to invest machines with qualities of consciousness. Ultimate Connection means to connect all information, logistics and energy supplies from all regions.”

In addition, the GCI sees itself as having a number of social responsibilities. These revolve around saving human lives, being able to respond better to disasters, providing mankind with safer and more comfortable living conditions and ensuring even the poorest and most remote communities have access to logistics, information and energy supplies.

KCS has brought together a number of innovative companies and ideas from all over the world to fulfil its GCI vision. These include Cloud, Near Space Traveller, Space Levitation Station, Solarship, Zwipe, HyalRoute Broadband, Parallel World, iPhoton, Super WiFi, Smart Structure and of course, Martin Aircraft Company with the Martin Jetpack.

Says CEO and Managing Director of Martin Aircraft Company, Peter Coker, “KuangChi Science is an extremely focussed company with the desire to use technology to improve human lives. This aligns completely with the goals and vision of Martin Aircraft Company and we look forward to drawing on their expertise and insights as the company moves towards and beyond commercialisation.”

For more information on KuangChi Science and the Global Community of Innovation please visit http://www.kuang-chi.com/htmlen/details/224.html

Staffing Update – Key Appointment

Andrew Male – Partnership Manager

Andrew Male joins Martin Aircraft Company as our Partnership Manager. Originally from London, Andrew and his family moved to Christchurch, New Zealand in 2005. Andrew brings to the role over 25 years of experience in growing and leading highly effective teams globally and has capabilities in delivering high profile products and services on time through new business processes, design and strategies.

Andrew has worked closely with a number of pioneering clients and forged strong dedicated alliances in both the private and public sectors in the UK, US, Europe and Asia Pacific. It has given him a solid track record and experience in driving a wide range of technical and business development projects that resulted in optimal outcomes for all parties.

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